Cascades Inc.

Good morning, my name is Joelle and I will be your conference operator today. At this time, I would like to welcome everyone to the Cascades Third Quarter 2024 Financial Results Conference Call. All lines are currently in listen-only mode. After the speaker's remarks, there will be a question-and-answer session. I'll now pass the call to Jennifer Aiken, Director of Investor Relations for Cascade. Ms. Aiken, you may begin your conference.

Thank you, Operator. Good morning, everyone, and thank you for joining our third quarter 2024 conference call. We will begin with an overview of our operational and financial results, followed by some concluding remarks, after which we will begin the question period. Today's speakers will be Hugues Simon, President and CEO, and Alan Hogg, CFO. Also joining us for the question period at the end of the call are Charles Malot, President and COO of Container Board Packaging, Jérôme Parlier, President and COO of Specialty Products, Jean-David Tardif, President and COO of Tissue Papers, and Luc Langevin, Senior VP of Corporate Services. Before I turn the call over to my colleagues, I would like to highlight that certain statements made during this call we'll discuss both historical and forward-looking matters. The accuracy of these statements is subject to risk factors that can have a material impact on actual results. These risks are listed in our public filings. These statements, the investor presentation, and the press release also include data that are not measures of performance under IFRS. Please refer to our Q3 2024 investor presentation for details. This presentation, along with our third quarter press release, can be found in the investor section of our website. If you have any questions, please feel free to contact us after the session. I will now turn the call over to our CEO, Eric Simon, who will begin with a review of our Q3 performance. Eric?

Thank you, Jennifer, and good morning, everyone. We're satisfied with the trend of our third quarter performance. Third quarter sales levels increased 2% from Q2, and we're stable year over year. Volume and pricing drove the sequential improvement, while pricing, favorable sales mix, and exchange rate offset softer volume year over year. Consolidated EBITDA of $140 million increased 25% from Q2, reflecting stronger pricing and lower production costs, partially offset by higher raw material costs. Year over year, consolidated EBITDA decreased 13%, as impacts from higher raw material costs and less favorable volume and sales mix were only partially offset by higher selling price in container boards. On the raw material side, highlighted on slides five and six, the Q3 average index price for OCC decreased 2% from Q2, but remained 83% higher year over year. Fiber availability was solid with good seasonal generation and low export activity. leading to a $20 reduction in October and a further $5 to $10 reduction in November. We expect continued favorable market conditions in the coming months. Average Q3 index prices for white recycled paper grades decreased 3% from Q2 and 11% from last year. The market remained balanced with readily available volumes of fibers translating into small decrease in pricing in the quarter. We have also seen small price decreases in both October and November and expect continued favorable conditions. Bulk prices were slightly higher sequentially, up 4% in the case of softwood and 2% for hardwood. Year-over-year prices remain higher, up 36% and 43% respectively. Market conditions improve in Q3 for hardwood and eucalyptus, with new capacity coming online And we expect favorable market conditions for these grades in coming months. Softwood grades also saw a price decrease at the end of Q3. We expect essentially stable market dynamics for softwood in the coming months given the announced downtime in Europe and capacity in British Columbia. Moving now to the results of each of our business segments as highlighted on page 7 through 12 of the presentation. Beginning with container board. Third quarter sales increased by 4% sequentially. This reflected higher selling prices and volume, partially offset by less favorable sales mix and exchange rates. Sequentially, shipments increased 1% from Q2. This reflects a 3% increase on the ferret roll side and stable shipment levels on converted products. Converting shipments decreased 1.5% in Canada, below the 2.1% increase in the Canadian market, largely due to capacity allocation to support the growth of our U.S. customer base. U.S. converting shipment increased 0.8%, slightly above the 0.4% U.S. market increase. EBITDA in the third quarter was $90 million, or 15% on a margin basis. This represents a 50% increase from Q2 and is the third consecutive sequential EBITDA improvement. Results benefited from recent market price increases, lower production and transportation costs. The benefits were partially offset by higher raw material prices. Year-over-year sales increased by 3%, with benefits from higher selling prices and more favorable sales mix and exchange rate offsetting lower volumes. EBITDA levels decreased by 11%, largely due to higher raw material costs. Year-over-year shipments decreased by 2% in Q3. This reflects a 4% decrease in parent roll shipments, mostly driven by the closure of our Trenton mill, and a 1% increase in shipments of converted products. Converting shipments increased by 1.8% in Canada, below the 7.6% increase in the Canadian market. U.S. converting shipments increased 0.4%, in line with the 0.6% U.S. market increase. On a year-to-date basis, converting shipments increased 6% in Canada, above the 5% industry. In the U.S., year-to-date shipments are up 5%, outperforming stable shipments for the industry. Continuing with our packaging business, our specialty product division continued to deliver solid results. Q3 sales increased 1% from Q2 on improved selling price and sales mix. partially offset by lower shipments in certain products. EBITDA was up 4% or 1 million from Q2, driven by higher realized spreads. This business's Q3 margin of 16% remained solid, improving slightly from the second quarter. Year-over-year sales increased 8% in Q2, with exchange rates and higher selling prices in certain products driving this growth. EBITDA improved by 29% or 6 million on higher realized spreads. Moving to our tissue business, third quarter sales decreased 2% sequentially due to lower average selling prices and volume related to sales mix. Converted product shipments increased 1% in away from home and decreased 2% in the retail market. EBITDA of $43 million decreased 20% from Q2 in line with our expectations, driven by higher raw material and transportation costs and slightly lower sales. Sales decreased 8% year-over-year. This reflected lower shipment levels and selling prices, upset by a positive sales mix impact. Shipments decreased 9% from the prior year quarter. This was largely driven by a 10% decrease in parent roll shipments following plant closures and higher internal consumption, as highlighted by the integration rate increasing to 94% from 87 year-over-year. On the converting side, shipments decreased by 2%, the result of a 1% increase in retail and 6% decrease in away-from-home. The average selling price increased by 2%, driven by sales mix and the beneficial exchange rate. Year-over-year EBITDA decreased by 18 million, or 30%. This is the outcome of our raw material costs, lower selling price, and a net negative volume and sales mix impact. These were partially offset by lower energy, transportation, and production costs, the last of which reflects the beneficial impact from recent planned closures. I will now pass the call to Alan, who will briefly discuss some of the financial highlights. Alan?